Washington, D.C. — Federal regulators announced today a settlement with 10 banks over abusive foreclosure practices. The settlement includes more than $8.5 billion in total assistance to homeowners, including $3.3 billion in direct payments to borrowers affected by unlawful mortgage-servicing practices. Eligible families will receive anywhere from between hundreds of dollars to $125,000, depending on their situation. This is in addition to last February’s historic $25 billion settlement between the five largest mortgage servicers and 49 state attorney generals over the so-called “robo-signing” scandal.
Julia Gordon, Director of Housing Finance and Policy at the Center for American Progress, issued the following statement in response to the announcement:
Today’s announcement, although certainly a step in the right direction, shows how difficult it is for the victims of unlawful foreclosure to receive adequate compensation. We commend regulators for their ongoing efforts to hold financial institutions accountable for misdeeds during the foreclosure crisis, but the payments in this settlement represent a mere fraction of the total harm inflicted on borrowers and communities.
The lesson is clear: Moving forward we must do all we can to prevent such foreclosures from happening in the first place. That means enacting strong standards for mortgage servicers, especially on foreclosure prevention activities, and making sure that consumers, as well as public enforcement bodies, have the power to hold banks accountable for violations of predatory lending laws.
In the meantime we hope that federal regulators work diligently to guarantee that the assistance in this settlement reaches the families that need it most—namely, those affected by past servicer malpractice and those at imminent risk of foreclosure today. Effective administration of this settlement will require a strong and independent monitor with real accountability to taxpayers.
Related resources from CAP:
- Strengthening the Consumer Financial Protection Bureau’s Proposed Mortgage Servicing Standards by Julia Gordon
- The Federal Housing Finance Agency Shouldn’t Punish Borrowers for State Foreclosure Timelines by the CAP Housing Team
- Understanding the New Mortgage Foreclosure Settlement by David Min and Alon Cohen
To speak with a CAP housing expert, please contact Katie Peters at email@example.com or 202.741.6285.